The approach of the Singapore courts with regard to compensatory damages claimed in civil litigation has been based on the usual principles like causation, remoteness of damages and mitigation. The claimant or plaintiff bears the burden of proving both the fact and amount of loss, and therefore must adduce sufficient evidence to quantify the damage.2 In terms of proving loss suffered by the plaintiff in claims for unliquidated damages, the Court of Appeal in Singapore has stated that an award of compensatory damages in contract law should be based ideally on the plaintiff's own loss rather than measuring it by reference to the defendant's gains or profits.3
Most notably perhaps, the Singapore courts have remained committed to the traditional principles of remoteness of damages espoused under Hadley v. Baxendale,4 declining to follow the new test set out by Lord Hoffman in The Achilleas,5 which is whether the defendant assumed responsibility for the loss that arose from the breach. Thus in MFM Restaurants Pte Ltd v. Fish & Co Restaurants Pte Ltd, the Court of Appeal expressly decided against adopting the 'assumption of responsibility' test, pointing out, inter alia, that the 'assumption of responsibility' approach (which is agreement-centred and based on whether the contract breaker had, on a true interpretation of the contract, assumed responsibility) appeared to exclude the operation of the very doctrine of remoteness of damage in contract law itself.6 The Court of Appeal was concerned with the practical uncertainties in applying this new test, given that parties at the time of entering the contract would usually not be thinking of assuming responsibility for the consequences of a future breach.7 The court thus did not accept Lord Hoffman's approach, except to the extent that the concept of assumption of responsibility is already incorporated in both limbs of Hadley v. Baxendale.8 The position under Singapore law was reaffirmed in Out of the Box,9 where the Court of Appeal reiterated its preference for the orthodox approach under Hadley. The court also stressed that, conceptually, 'it is important that cases that in fact concern the interpretation of a contract to identify the specific nature of the obligation that has been undertaken not be conflated, or for that matter confused, with cases that truly are concerned with questions of remoteness'.10
While this is a chapter on compensatory damages, it should be noted that the Singapore courts have expressed caution on the award of restitutionary damages recognised by the UK courts under AG v. Blake,11 or at least the characterisation of AG v. Blake damages as restitutionary in nature. AG v. Blake was an exceptional case, where the defendant breached his contractual undertaking not to divulge official information gained as a member of the UK intelligence service by entering into a publishing deal for his autobiography, and where the Attorney General sought a full account of his wrongfully gained profits. AG v. Blake therefore allowed the award of damages based on the defendant's gains or profits, rather than the plaintiff's losses. The Court of Appeal in Singapore held that the main difficulty with recognising AG v. Blake damages as a part of Singapore law is the uncertainty of the legal criteria to be applied in awarding such damages.12 Nonetheless, the court left open the possibility that AG v. Blake damages could be recognised, although the precise status and scope of this category of damages under Singapore law is likely to remain unresolved until it is determined by the court in the future.13
In addition, while the Court of Appeal recently accepted Wrotham Park damages as a part of the contractual remedies available under Singapore law, its approach differs from the UK position in some important respects that will be briefly discussed below.14
II QUANTIFICATION OF FINANCIAL LOSS
The quantification of financial loss usually underpins any compensatory claim for damages – while such quantification may involve technical evidence assisted by the relevant experts, it is usually on the basis that damages should compensate the plaintiff for the defendant's wrongdoing. In tort, the purpose of damages is to put the claimant back into the position in which he would have been, if the tort had not been committed.15 In a contractual claim, damages seek to put the plaintiff in the position he or she would have been in had the contract been performed; this is often seen as compensation for the plaintiff's expectation loss – such expectation loss would encompass the plaintiff's total (or gross) loss – including the expected (or net) profit that the plaintiff would have received had there been no breach of contract as well as his or her expected expenses, which he or she would have recouped if the contract had been performed.16 Both approaches in tort and contract are compensatory, and seek to compensate the claimant for his or her loss.
Hence, quantification of financial loss in contractual claims would often be premised on a valuation of the position that the plaintiff would be in had the contract been performed, complete with the expected costs or expenses incurred in performing the contract. For example, damages for breach of warranty in a contract are to be assessed on the basis of what would be required to put a plaintiff in a position he would have been in, had there been no breach of the warranty.17 The Court in Holland Leedon Pte Ltd v Metalform Asia Pte Ltd18 noted that this may be assessed in one of two ways, with reference to the diminution in value (the difference between the market value of the business warranted and the actual value of the business) or the costs of cure.
Quantification of financial loss for tort would involve an exercise of what would have happened if the tort had not been committed – so a conspiracy to divert business away from a claimant would involve assessing the revenue or profits that had been lost, complete with the expected costs or expenses in serving the customers had they not been diverted away by the conspirators. Likewise, for the tort of conversion, the measure of damages is essentially the market value of the converted equipment at the date of conversion or the cost of replacing the converted equipment.19
An award of substantial damages where loss is asserted will only be justified where the court is satisfied as to both the fact of damage (i.e., the adverse consequence) and the amount.20 If the plaintiff satisfies the court on neither, he will at the most be awarded nominal damages where a right has been infringed or where liability is established.21
It is well established that a plaintiff claiming damages must adduce before the court sufficient evidence of his or her loss. This approach has been affirmed by the Court of Appeal, which has held that proof of damage is very much a primary matter – topics such as remoteness and mitigation are potentially relevant only after there is proof of damage to begin with.22 Such proof depends wholly on the factual matrix concerned, which can take a myriad of forms.23
That being said, where it is clear that some substantial loss has been suffered, the fact that an assessment is difficult because of the nature of the damage is no reason for awarding no damages or merely nominal damages.24 In this respect, '[w]here precise evidence is obtainable, the court naturally expects to have it, [but] where it is not, the court must do the best it can'.25 The court must do the best it can on the evidence available and adopt a flexible approach where it is clear that some substantial loss has been incurred.26
In doing its 'best', the courts will seek to balance the plaintiff's burden of adducing sufficient evidence of his or her loss on the one hand, and the fact that absolute certainty and precision is impossible to achieve in some cases on the other.27 In this regard, the Court of Appeal acknowledged the reality that 'some educated guesses have to be made – regardless of the precise methodology ultimately adopted by the court', and that 'life is far more complex than simple law school hypotheticals and even textbooks would have us believe'.28
Thus, where the plaintiff has done its level best to prove its loss and the evidence is cogent, the court should allow it to recover the damages claimed.29 Even where 'the available evidence on which to base an award of damages' is 'far from satisfactory', the courts are still able to award 'just and fair sums to plaintiffs if the legal rules and principles justified them'.30
Where the defendant has made it difficult for the plaintiff to prove the quantum of its loss, the defendant will not be able to take advantage of the situation. In Sea-Shore Transportation Pte Ltd v. Tecknik-Soil (Asia) Pte Ltd,31 the court accepted the principle in Armory v. Delamirie,32 which raises an evidential presumption in the claimant's favour, giving him the benefit of any relevant doubt where the defendant has made it difficult or impossible for him to adduce relevant evidence. The court held that the Armory principle should be subject to some qualifications, as follows. First, the full rigour of an adverse presumption applies only where a party has intentionally and in bad faith destroyed or refused to produce the subject matter in question so as to prevent the claimant from adducing evidence that could prove his or her case. Next, it should only apply where the wrongdoer's acts make it difficult or impossible for the innocent party to prove its loss or where the facts needed to prove the loss are known solely by the wrongdoer and he or she does not disclose these facts to the innocent party. Further, any presumption must still be consistent with the rest of the facts of the case and founded on the evidence that has been presented.33
The flexible approach does not mean that a plaintiff could simply claim that evidence was not available or irrelevant without more. Where the plaintiff has failed to attempt its level best to prove its loss and adduce cogent evidence, this failure to meet the evidentiary threshold necessary to quantify its loss will result in the award of nominal damages only.34
iii Date of assessment
As a general rule, damages for breach of contract or tort are assessed as at the date of breach.35
In The Golden Victory,36 the UK Supreme Court held that this general rule is not inflexible, and that the courts are not precluded from taking into account events that occur subsequent to a breach of contract, if doing so would give effect to the overriding compensatory principle that the damages awarded should represent no more than the value of the contractual benefits of which the plaintiff had been deprived.
The High Court of Singapore has also recognised that the general rule that damages are to be assessed as at the date of the breach is not an absolute one. Thus, the court held that where it is necessary to compensate the plaintiff adequately for the damage suffered, or if it would otherwise lead to injustice, a different date of assessment can be selected.37
In Swiss Singapore Overseas Enterprises Pte Ltd v. Exim Rajathi India Pvt Ltd,38 the High Court distinguished The Golden Victory based on its facts – the overriding compensatory principle was that damages awarded should represent no more than the value of the contractual benefits that the claimant had been deprived and therefore where at the date of assessment an event had already happened that would have terminated the contract had it been still in place, the court should have regard to what actually occurred.39 In Swiss Singapore there was a one-off sale and delivery contract, as opposed to the longer-term contract in The Golden Victory that provided for obligations to be performed over a period of time.40
However, any notion that there is a material distinction between one-off contracts and contracts for performance over a prolonged period of time for the purposes of the date of assessing damages was rejected by the UK Supreme Court in Bunge SA v. Nidera BV.41 In Bunge v. Nidera, there was a one-off contract for the sale and purchase of Russian milling wheat. Following Russia's introduction of an embargo on the export of wheat, the sellers notified the buyers of the embargo and purported to cancel the contract. The buyers treated this cancellation as premature, and thus a repudiation, which they accepted. On the assessment of damages, the sellers argued that, even if the termination was premature, the fact that shipment under the contract would have been subject to the ban when the time for shipment came meant that no loss had been suffered. The UK Supreme Court stated that the compensatory principle in The Golden Victory is not limited to instalment contracts, and awarded the buyers nominal damages. Lord Sumption held that '(t)here is no principled reason why, to determine the value of the contractual performance that has been lost by the repudiation, one should not consider what would have happened if the repudiation had not occurred', as this is 'fundamental to any assessment of damages designed to compensate the injured party for the consequences of the breach'.42
While certainty as engendered by the breach date rule for assessment of damages may be valuable, the courts have shown that they are willing to take into account supervening events that have occurred post-breach to ensure that the claimant is truly compensated for his or her loss. Although Swiss Singapore dealt with a one-off contract, the decision on which date to assess damages did not turn on whether the contract was a one-off contract or instalment contract. Thus, the Singapore courts will, in accordance with the compensatory principle, exercise the flexibility of taking into account supervening events that have taken place by the date of assessment to ensure that the claimant is truly compensated for the loss he or she has suffered (if any).
iv Financial projections
Financial projections are sometimes necessary where a quantification of financial loss involves assessing loss of a prospective nature. For example, this may be achieved through a loss of profits analysis, whereby the plaintiff is awarded the difference between its actual profits and the profits it would have obtained 'but for' the defendant's breach. Alternatively, a business valuation analysis may be available, whereby loss is quantified as the diminution in value of a business, income stream or other specified asset as a result of the defendant's breach of contract.
The courts are cognisant of the fact that such financial projections, which involve projections into the future, are inevitably speculative to some degree.43 As such, regardless of what calculation or valuation method is used for the financial projections, so long as the application of the method rests on certain assumptions, the court will look to scrutinise the reasonableness of these assumptions. In any event, the use of any projection or valuation method would be deemed inappropriate if it is significantly at variance with the evidence of what actually happened.44 Therefore, in the English Court of Appeal case of Senate Electrical Wholesalers Ltd v. Alcatel Submarine Networks Ltd (formerly STC Submarine Systems Ltd)  2 Lloyd's Rep 423, a business was sold to the plaintiff for £90 million, but the plaintiff subsequently discovered that the profits of the business was overstated by £1.7 million, which was a breach of warranty by the seller. For damages, the plaintiff quantified his loss by applying a multiplier of 13.67 to the difference between the warranted profit and the actual profit, but this approach was rejected by the English courts. The English Court of Appeal was not convinced that this approach was appropriate on the facts of the case, but might be appropriate where the purchase price was derived in that manner. Similarly, in Columbia Asia Healthcare Sdn Bhd v. Hong Hin Kit Edward and another and another appeal,45 the Singapore High Court rejected a multiplier approach in valuing damages as it found that the claimant had failed to establish that EBITDA coupled with an appropriate multiplier was the main basis for deriving the actual purchase price. The case went on appeal and the High Court's decision was affirmed by the Court of Appeal where it was held that:
the expert evidence cannot be significantly at variance with evidence of what the purchaser had actually valued the shares. When considering an expert's valuation evidence, the court will also look at the realities of commercial bargaining and market competition to determine if the valuation model used and the assumptions underpinning such a model could be said to reflect what a willing purchaser would pay a willing vendor.46
It is common knowledge that each financial or valuation model for the purposes of loss assessment is highly dependent on its underlying assumptions. For instance, the discounted cash flow (DCF) model, which is widely used in both loss of profits and business valuation analyses, is nothing more than a calculation machine – the value that emerges from the model is completely dependent on the values it has been fed with.47 The integrity of the financial model is thus dependent on the assumptions underpinning the specific method.
As such, where financial projections rest on certain assumptions, the court will consider both qualitatively whether the assumption is reasonable in light of the evidence and also quantitatively the likelihood of the assumed event actually materialising.48 For instance, if one were to make a projection based on the DCF model, that likelihood of the assumption materialising – to the extent that it is found to be less than a certainty – represents a risk to the business that must be accounted for in the analysis.49 As such, parties looking to rely on the various models for financial projections or valuations ought to be aware that such projections are not just a matter of arithmetical calculation – obtaining reliable information and making credible assumptions for the financial model are just as important in producing an accurate valuation or assessment.
vi Discount rates
It is generally accepted that a discount has to be given for accelerated receipt of any sums that had not fallen due at the date of the breach (i.e., future loss of profits), so as to properly account for the potential interest accrued by the plaintiff until the final date on which money would have been due. An award of compensation that failed to take this into account would overcompensate the plaintiff.50 This is largely standard practice – the High Court has recognised that 'this was the discount to be given to the [defendant] because the damages were being crystallised at one go and [the plaintiff] would be paid the damages immediately instead of having the payment stretched over a number of years'.51
In addition, many financial projections, especially those involving cash-flow models, do factor in discount rates that are applied to the projected cash flows. For instance, under the DCF model, a discount rate is applied to transform the future cash flows into their net present value. This discount rate should reflect the risk inherent in the forecast future cash flows, and can, for example, be the company's or business' weighted average cost of capital (WACC),52 which is a measure of a company's return to those who finance its business by both debt and equity.53
Where the court finds that the discount rate used in a particular financial projection fails to reflect certain risks to the business, it will not shy away from making an appropriate adjustment to account for those risks.54 Thus, in Poh Fu Tek, the High Court increased the discount rate to reflect the risk of the company losing the right to continue its operations at its two key properties, and the risk that a major customer may not place any orders with the company in the future.55
vii Currency conversion
The law on currency conversion for damages is governed by the Miliangos principle, which establishes that an English court could give judgment for a sum of money expressed in foreign currency and, if it was necessary to execute on the judgment, the judgment in foreign currency would be converted to local currency on the date when the plaintiff was given leave to levy execution.56
This principle has been applied in Singapore, and the High Court has confirmed that there is no right of election – of asking for judgment in local currency or for conversion of the judgment sum from foreign currency to local on a date other than the date of execution – open to the plaintiff.57 The court reasoned that the rationale for the Miliangos doctrine was that it was right to allow judgment to be entered in a foreign currency either because it was the relevant currency of the transaction or because it was the currency in which the plaintiff had most truly suffered his loss. In addition, the House of Lords in Miliangos was not giving the plaintiff an option to select his currency but was instead redefining the obligation of the debtor to pay the sum owed in the relevant currency, and had found that using the date on which the court authorised execution as the date for conversion of the foreign currency into the local currency was nearest to securing to the plaintiff exactly what he bargained for.58
viii Interest on damages
The power of the Singapore courts to award interest on damages is derived from Paragraph 6 of the First Schedule of the Supreme Court of Judicature Act. Section 12 of the Civil Law Act allows the court to order that interest be awarded on the judgment sum at such rate as it thinks fit on the whole or any part of the debt or damages for the whole or any part of the period between the date when the cause of action arose and the date of the judgment.
A plain reading of Section 12 suggests that interest is not awarded as of right – it is a matter of the court's discretion.59 However, as a matter of principle, plaintiffs who have been kept out of pocket without basis should be able to recover interest on money that is found to have been owed to them from the date of their entitlement until the date it is paid. Thus, the purpose of the judicial discretion is to enable the courts to achieve justice according to the unique circumstances of each case. Such discretion would extend to a determination of whether to award interest at all; what the relevant rate of interest should be; what proportion of the sum should bear interest; and the period for which interest should be awarded.60
The general rule is that interest should commence from the date of accrual of loss; however, this is subject to the court's discretion to order that interest run from a date later than the date of accrual of loss. The court can therefore delay the start date for calculating interest where there has been an unjustifiable delay on the part of the plaintiff in bringing his or her action to trial.61 Thus in Robertson Quay, the Court of Appeal ordered that interest on damages awarded should run only from the date of service of the statement of claim. The court departed from the general rule because of the plaintiff's unwarranted delay (of five years after its loss accrued) in commencing the suit.62 Where losses accrue over a period of time, however, a sensible and practical approach must be taken to the dates of accrual. In Dystar Global Holdings (Singapore) Pte Ltd v. Kiri Industries Ltd and others,63 the Singapore International Commercial Court agreed with the plaintiff's proposal to take the midpoint of the period or year during which the losses accrued, plus 60 days being the time period for payment of the invoices.64
With respect to the nature of the interest awarded, Section 12 of the Civil Law Act specifically enables the courts to award simple pre-judgment interests on debts and damages – the provision does not authorise the award of compound interest. However, the High Court has found that this did not necessarily prohibit the court from granting compound interest per se or from granting damages assessed with reference to the actual compound interest lost or foregone by the plaintiff who had suffered those damages.65 Thus the court held that the Singapore courts have an 'unfettered discretion to award simple or compound interest as damages'. This approach 'accords with commercial and economic reality' and would better reflect a plaintiff's loss because if it were otherwise, a plaintiff in a long-running case risks being severely under-compensated in damages, especially where the interest rate was ascertained to be very high.66
The key distinction here is between 'interest as damages' and 'interest upon the damages'. Section 12(2)(a) of the Civil Law Act states that nothing in the section 'shall authorise the giving of interest upon interest', but the court has held that this section will not apply to an award of interest as damages, which comprises of the loss to the plaintiff assessed with reference for instance to the compound interest that the money could possibly have earned. This separate head of damage represented by the compound interest is, therefore, not within the scope of Section 12.67
Any quantification of financial loss (and subsequent calculation of the quantum of damages) must take into account the relevant tax implications so as to restore the plaintiff to the position it would have been in had the relevant breach or tortious conduct not occurred.
The relationship between taxation and damages awarded for the loss of future earnings was established in British Transport Commission v. Gourley.68 It was held that the award of damages should reflect the deductions that would have been made for tax and national insurance in arriving at the settlement figure, because 'to ignore the tax element at the present day would be to act in a manner which is out of touch with reality'.69
The Court of Appeal has since affirmed the Gourley principle,70 and it is clear that where damages are awarded for taxable losses (i.e., loss of future income, loss of profits), an income tax or corporate profits tax deduction ought to be made. However, where the damages are meant to compensate for a non-taxable loss (i.e., loss of a capital asset, loss of capital gains), it would be inappropriate to make a deduction for tax as the plaintiff would not have incurred any tax liability thereon.71
x Minority discount on valuation of shares
Where a minority shareholder successfully sues for shareholder oppression and the court orders the majority shareholder to buy out the shares of the minority shareholder, an issue that may arise is whether the valuation of the shares should incorporate a discount for lack of control, or a minority discount as it is often called. Minority shareholders do not control the running of a company generally, and valuers often apply a discount for lack of control to a valuation of their shares. Conversely, where a majority bloc of shares that confers control to any buyer is valued, a premium may be applied to their valuation. However, when a minority shareholder is forced out of the company by the oppressive acts of the majority such that the former has to seek a buy-out of his shares, should the discount for lack of control apply? The court will be concerned to ensure that the oppressor does not profit from his or her wrongful behaviour.72 On the other hand, it is a fact that a minority shareholding may be relatively harder to dispose of, and this difficulty remains even if the minority shareholder seeks a buyer in normal circumstances (sans any oppressive behaviour by the majority shareholder).
Where the company concerned is a quasi-partnership, a presumption that there is no discount for lack of control applies. However, there is no general rule in cases involving companies that are not quasi-partnerships. The court must look at all the facts and circumstances:
(f)or instance, the court will be more inclined to order no discount where the majority's oppressive conduct was directed at worsening the position of the minority as shareholders so as to compel them to sell out . . . or entirely responsible for precipitating the breakdown in the parties' relationship . . . As with cases involving quasi-partnerships . . . the court is likely to order a discount where the conduct of the minority contributed to their exclusion from the company or the oppressive conduct complained of . . . The court will also consider relevant background facts such as whether the minority had originally purchased their shares at a discounted price to reflect their minority status, or for full value . . . Ultimately, the broad task for the courts is to ensure that the forced buyout is fair, just and equitable for the parties in all the circumstances.73
III EXPERT EVIDENCE
The role of expert evidence in legal proceedings is set out in Section 47(1) of the Evidence Act, which establishes that 'when the court is likely to derive assistance from an opinion upon a point of scientific, technical or other specialised knowledge, the opinions of experts upon that point are relevant facts'.
ii The role of expert evidence in calculation of damages
There is no difference in the principles governing experts in different fields. They all relate to impartiality, and this is reflected in the relevant requirements for expert witnesses outlined in Order 40A of the Rules of Court.
Typically, expert evidence on assessment of damages involves (but is not limited to) issues such as making of assumptions, projection of cash flows and valuation of hypothetical scenarios. Thus, expert evidence usually plays an important role in helping the court understand how each party had derived the figures they have relied upon in their respective cases. The Singapore High Court has stated, in the context of valuation evidence on the valuation of shares, that:
the court must not defer too readily to expert evidence . . . [T]he Court must assess for itself the reasonableness of an expert's opinion against the criteria of fact and logic. This will sometimes require the court to go deeper into the technical basis upon which the expert valuation has been performed and to consider whether that basis for valuation has been applied using assumptions which are reasonable and justified by the facts'.74
The courts have recognised that an accountant expert may be engaged to fulfil one of at least three roles in connection to litigation. These include: (1) acting as an independent expert and providing an opinion on liability, quantum or both; (2) acting as a consultant assisting in the preparation of the case of one of the litigants; and (3) acting in a supporting administrative role in managing the documentary information required for the litigation. It is only in the first role that the forensic accountant is acting as a forensic expert.75 When the accountant acts as a consultant, his or her role is inconsistent with the expert's duty to be independent; therefore, the accountant should not accept a role that requires him or her to be a consultant as well as an independent expert.
iii The court's role excluding and managing expert evidence
The court's role in excluding and managing expert evidence is illustrated by Order 25 Rule 3 of the Rules of the Court. In particular, the court will determine, inter alia, whether an order should be made limiting the number of expert witnesses;76 whether any direction should be made for a discussion between the experts prior to the exchange of their affidavits exhibiting their reports for the purpose of requiring them to identify the issues in the proceedings and where possible, reach agreement on an issue, and if such a direction should be made, whether: (1) to specify the issues which the experts are to discuss; and (2) to direct the experts to prepare a joint statement indicating the agreed issues, the issues not agreed and a summary of the reasons for any non-agreement;77 and whether directions should be given pursuant to Order 40A.78
Where it is apparent that the experts' further assistance is necessary, the courts have seen fit to conduct a hot-tubbing exercise where each expert gives his or her reasons to support his or her conclusions and challenge the opposing expert's conclusions, with the opposing expert having the opportunity to respond immediately. This could be done with the court and counsel asking questions on the reasons and counsel providing facts to support or challenge the reasons given.79
Also, in cases where valuation evidence on shares as well as assessment of damages is undertaken, the court has suggested that parties should consider whether the same person should be appointed as the valuer of shares and assessor of damages, to avoid any concern that there may be some discrepancy in the approaches.80
In relation to expert evidence, a judge should not substitute his or her own views for those of an uncontradicted expert. On the other hand, a court must not unquestioningly accept unchallenged evidence and the evidence must be weighed and evaluated in the context of the factual matrix and the objective facts, and an expert's opinion 'should not fly in the face of proven extrinsic facts relevant to the matter'.81 Further, the court may not adopt a valuation approach that parties have not been given the opportunity to lead evidence or make submissions on.82
iv Independence of experts
The duties of an expert are well summarised in Ikarian Reefer,83 but probably the most important duty is that of independence. The independence of expert witnesses is governed by Order 40A Rule 2(1), which establishes 'the duty of an expert to assist the Court on the matters within his expertise'. This duty overrides any obligation to the person from whom he or she has received instructions or by whom he or she is paid.84
There is no overriding objection to a properly qualified person giving expert evidence just because he or she is employed by one of the parties.85 The fact of the expert witness' employment may affect the weight of the evidence but that is a separate matter from the question of the expert's independence.86
That being said, when an accountant expert acts as a consultant and assists in the preparation of a party's case, he or she is assisting in the advocacy of the client's case, which is a role that is inconsistent with the expert's need for independence. As such, careful consideration should be accorded to the evidence of an expert accountant who has been engaged as an investigator and collator of facts, and later reprises in court the role of an advocate in support of evidence that he or she has gathered. The courts are cognisant that such evidence may, at times, be coloured by the difficult and sometimes conflicting roles being discharged by the expert accountant.87
In addition, the evidence of an expert 'should not only be independent but should also be seen to be independent'.88 This means that while the courts will permit a strong defence of an expert's independent views and position, the expert should not stray into engaging in partisan advocacy to advance his or her client's cause.89 If he or she appears to do so, his or her independence will be called into question and he or she will inexorably lose credibility.90 The expert's advocacy is thus limited to supporting his or her independent views and not the client's cause – this must be brought to the expert's attention by the instructing solicitor.91
In addition, in the interests of ensuring that the independence of the expert is preserved, if an expert 'either has or has previously had a significant relationship with any interested party, particulars of this too ought to be disclosed without any prompting. A failure to make proper disclosure in a timely manner may raise serious concerns about apparent or actual bias on the part of the expert'.92
Order 40A Rule 3(2)(h) further sets out the requirement for an expert's report to 'contain a statement that the expert understands that in giving his report, his duty is to the Court and that he complies with that duty'. This emphasises that it is to the court that the expert's overriding duty is owed irrespective of who instructed or called the expert.93
v Challenging experts' credentials
Per Section 47(2) of the Evidence Act, '[a]n expert is a person with such scientific, technical or other specialised knowledge based on training, study or experience'. There is no need for the expert to be qualified professionally – as long as the court is satisfied that the witness has sufficient knowledge or expertise to qualify as an expert, he or she could be regarded as such.94 Thus an expert's credentials may be established by his or her experience concerning the matters in question,95 so long as the experience relates specifically to those matters.96 Nonetheless, it remains open for any party to challenge an expert's credentials on the basis of his or her lack of professional qualifications or experience, as such matters still affect the weight accorded to the expert evidence.97
The expert witness is also required to give details of his or her qualifications in the expert report.98 At the very minimum, a curriculum vitae detailing the expert's relevant experience should be provided, with special regard to the issue on which the expert's opinion is sought. The expert's report should state the precise manner, and not merely the general area of inquiry, in which the witness would be of use to the court.99 A party may thus use this information as a basis upon which to challenge the expert's credentials.
vi Oral and written submissions
Unless the court otherwise directs, expert evidence must be given in a written report signed by the expert and exhibited in an affidavit sworn to or affirmed by him or her testifying that the report exhibited is his or hers and that he or she accepts full responsibility for the report.100 Such a report must, inter alia: (1) give details of the expert's qualifications;101 (2) give details of any literature or other material that the expert has relied on in making the report;102 (3) contain a statement setting out the issues that he or she has been asked to consider and the basis upon which the evidence was given;103 (4) where there is a range of opinion on the matters dealt with in the report, summarise the range of opinion, and give reasons for his or her opinion;104 and (5) contain a summary of the conclusions reached.105
So, for instance, where damages are to be assessed by reference to a business valuation prepared by an expert witness, the expert should consider the full range of the common methods used in such a valuation (i.e., asset, market and income). Any omission to prepare a valuation on one or more of these methods should be explained in his or her report; likewise, the ultimate choice of valuation should be justified, and where divergent valuations are attained, these should be discussed and explained.
Non-compliance with these requirements does not automatically render the evidence inadmissible.106 However, it may result in the expert's opinion being accorded little or no evidentiary weight as well as in adverse cost consequences for the party who engaged that expert.107
IV RECENT CASE LAW
i Turf Club Auto Emporium v. Yeo Boong Hua108
The facts of the case
The facts of Turf Club revolve around a failed joint venture (JV) between two groups of shareholders to develop a plot of land in Singapore, and a settlement recorded in a consent order that was subsequently breached. The majority group of shareholders, the SAA Group, had leased a plot of land from the Singapore government authority (the Singapore Land Authority) under a head lease. The SAA Group then granted corresponding subtenancies to the JV companies, which in turn granted sub-subtenancies of the units on the site to ultimate tenants. The revenue of the JV companies therefore would come from the rent payable by the ultimate tenants. While the site was being developed, the two groups fell into dispute. The parties eventually reached a settlement that was recorded in a consent order. The consent order provided for a bidding exercise, where both groups of shareholders agreed that the higher bidder would purchase the shares of the lower bidder. It was also agreed that if the minority group was the higher bidder, the majority group would use their best endeavours to transfer the lease to the JV companies. Valuers were appointed to conduct an independent and fair valuation of the shares and supervise the bidding exercise.
While the valuation process was ongoing, and unbeknown to others, the SAA Group renewed the head lease with the Singapore Land Authority for another three years but failed to grant corresponding subtenancies to the JV companies. After this came to light, the minority group commenced legal proceedings against individual members of the SAA Group, claiming contractual breaches of the consent order and in tort.
In a landmark decision, the Court of Appeal affirmed in Turf Club the availability of Wrotham Park damages as part of the remedies under contract law in Singapore. Prior to Turf Club, references have been made to Wrotham Park damages by the Singapore courts,109 although such damages have never been awarded. Wrotham Park damages are measured (objectively) by such a sum of money as might reasonably have been demanded by the plaintiff from the defendant as a quid pro quo for relaxing the covenant between them.110 This is akin to a 'licence fee' that the plaintiff could reasonably have extracted in return for his or her consent to the defendant's actions that would otherwise constitute a breach of contract.
The Court of Appeal established that the legal requirements for the award of Wrotham Park damages under Singapore law are as follows:
- the court must be satisfied that orthodox compensatory damages (measured by reference to the plaintiff's expectation or reliance loss) and specific relief are unavailable;
- it must, as a general rule, be established that there has been (in substance, and not merely in form) a breach of a negative covenant; and
- the case must not be one where it would be irrational or totally unrealistic to expect the parties to bargain for the release of the relevant covenant, even on a hypothetical basis.111
The assessment is objective and by reference to a hypothetical bargain rather than the actual conduct112 of the parties.
Applying the law to the facts, the Court of Appeal held that Wrotham Park damages could not be claimed because orthodox compensatory damages were available to the plaintiffs, which could be identified as the loss of the value of their shares in the JV companies caused by the breaches of the consent order.
Finally, the Court of Appeal also set out some tentative observations on AG v. Blake damages. The court indicated that the primary difficulty in recognising such damages as part of Singapore law was the uncertainty of legal criteria to be applied in awarding such damages. If AG v. Blake damages were to be accepted as part of the law on contractual damages in Singapore, it may perhaps be recognised as an exceptional remedy confined to the unique category of cases where the law has a legitimate basis for punishing the defendant or deterring non-performance.113
The significance of the decision
The decision in Turf Club has made it clear that Wrotham Park damages are recognised as a head of contractual damages in Singapore. The Court of Appeal explained that the doctrine fills a remedial lacuna that arises in cases where the court is unable to award orthodox compensatory damages or grant specific relief, but where there is still a need to provide the plaintiff with a remedy to protect the plaintiff's performance interest (i.e., the primary right to performance of the defendant's obligations).
In an illuminating judgment, the Court of Appeal also examined the conceptual foundation of Wrotham Park damages. While the court indicated that Wrotham Park damages may be restitutionary as a matter of description, given that often at least some of the gains of the defendant are disgorged, they are in fact compensatory in nature. In fact, a restitutionary approach suggests or implies that Wrotham Park damages should be available only where the defendant concerned derives a benefit from his or her breach of contract, but that is not the case. Indeed, the Court of Appeal explained that Wrotham Park damages are objective compensatory awards aimed at compensating the plaintiff for the loss of the performance interest of which the plaintiff has been deprived owing to the defendant's breach of contract.114 Further, given that such damages are assessed by reference to the hypothetical bargain, the Court of Appeal indicated that it is not clear why the tests of causation and remoteness of damages apply, since they are premised on the need to establish a sufficient link between the defendant's breach and the subjective loss of the plaintiff.
However, the Court of Appeal declined to follow the UK Supreme Court in One Step if it indeed limited the award of such damages to cases where the contractual right breached is considered to be an economically valuable 'asset' (i.e., where the breach results in the loss of a valuable asset created or protected by the right that was infringed, such as in cases involving a restrictive covenant over land, intellectual property or confidential information).115 The Court of Appeal was of the view that it was not clear when a contractual right can be considered an 'asset' or when there would be (as per Lord Carnwarth's concurring judgment with the majority) 'the abstraction or invasion' of 'property and analogous rights'.116 In its judgment, the Court stated that there should be no reason to deny protection to a plaintiff's performance interest where the contractual right breached was of a personal nature, as opposed to property rights, when orthodox contractual remedies are not available.
Looking forward, the UK Supreme Court in One Step had identified examples of breaches of contractual rights that can be protected under this doctrine such as breaches of confidentiality. Breaches of confidentiality, where the plaintiff is unable to restrain the breach in time, often can give rise to situations where compensatory damages may be hard to quantify. It may even be possible to envisage that compensatory damages in such cases, having regard to the three requirements highlighted by the Court of Appeal in Turf Club, are unavailable, as opposed to just being hard to quantify. Applying the test set out in Turf Club, one can appreciate that the third requirement may be difficult to satisfy – parties to a confidentiality obligation would generally not care to bargain for the release of the confidentiality or non-disclosure covenant and would instead insist on the strict compliance with the covenant. If that is so, it may be difficult to envisage cases of breach of confidentiality that satisfy the third requirement, which is that the case must not be one where it would be irrational or totally unrealistic to expect the parties to bargain for the release of the relevant covenant, even on a hypothetical basis. It remains of interest for a case to come up for consideration in future where a party seeks Wrotham Park damages in Singapore for breach of a confidentiality covenant, and whether the first and third requirements as set out by the Court of Appeal in Turf Club can be satisfied where confidentiality covenants are breached. Nonetheless, breaches of confidentiality and whether they can qualify for Wrotham Park damages aside, it is now clear that Wrotham Park damages are available as a contractual remedy in Singapore for breaches of contract, and that such damages are compensatory in nature.
V CIVIL JUSTICE REFORMS
In October 2018, the Ministry of Law in Singapore sought public consultation on civil justice reforms, following the recommendations of the Civil Justice Review Committee (CJRC) and Civil Justice Commission (CJC). By way of context, the CJC was constituted by the Honourable Chief Justice Sundaresh Menon on 5 January 2015 with the mandate to, inter alia, 'transform, not merely reform, the litigation process by modernising it, enhancing efficiency and speed of adjudication and maintaining costs at reasonable levels'.117 Subsequently, the Ministry of Law announced the establishment of the CJRC on 18 May 2016 to recommend reforms to Singapore's civil justice system. The recommendations made by the CJC and CJRC are wide and far-reaching, ranging from instituting a more judge-driven process in the case management system to an arbitration-style discovery regime to introducing scale costs in litigation. Among the recommendations is one that adopts a default position where a single court expert will be appointed in cases where expert evidence is necessary. The court expert will be granted access to all evidence to assist in the formulation of his or her expert opinion and, generally, no party expert witnesses will be permitted.118
The rationale driving the recommendation was that the current system of party-appointed experts has its difficulties, namely: (1) the expert witnesses often have irreconcilable differences in opinion – their evidence may then unnecessarily complicate the issues before the court, thus becoming counterproductive rather than helpful to the adjudicative process; (2) party-appointed experts are presented with the facts of the case framed according to a particular perspective by the party engaging them, which may influence their interpretation of the evidence; and (3) the disproportionately high costs usually incurred in the preparation and presentation of expert testimony.119
There is merit in the recommendation as there is much value in having an impartial expert whose paramount duty is to the court, and who has access to all available evidence from both sides to formulate his or her views. It is not uncommon to see party-appointed experts present to the court starkly different opinions, leaving the court with the unenviable task of assessing which of the opinions (if any) to adopt. Under the recommendation, however, the court retains the discretion to allow parties to have their own party-appointed experts in appropriate cases.
1 William Ong Boon Hwee is a partner at Allen & Gledhill. The author would like to thank Laura Ngiam and Dion Loy from Allen & Gledhill LLP for their assistance in the production of this chapter.
2 Robertson Quay Investment Pte Ltd v. Steen Consultants Pte Ltd and another  2 SLR(R) 623;  SGCA 8 at .
3 MFM Restaurants Pte Ltd and another v. Fish & Co Restaurants Pte Ltd and another appeal  1 SLR 150 at .
4 (1854) 9 Exch 341; (1854) 156 ER 145.
5  1 AC 61;  UKHL 48.
6 MFM Restaurants (see footnote 3) at –.
7 id. at –.
8 id. at .
9 Out of the Box Pte Ltd v. Wanin Industries Pte Ltd  2 SLR 363;  SGCA 15.
10 id. at .
11 Attorney-General v. Blake (Jonathan Cape Ltd Third Party)  AC 268.
12 Turf Club Auto Emporium Pte Ltd and others v. Yeo Boong Hua and others and another appeal  SGCA 44 at –.
13 id. at .
14 See Section IV for a more thorough discussion.
15 Swiss Butchery Pte Ltd v. Huber Ernst and others and another suit  4 SLR 381 at .
16 Turf Club (see footnote 12) at .
17 Columbia Asia Healthcare Sdn Bhd and another v. Hong Hin Edward and another and other suits  3 SLR 87 at .
18 Holland Leedon Pte Ltd v. Metalform Asia Pte Ltd  3 SLR 377 at .
19 Marco Polo Shipping Co Pte Ltd v. Transport Services Pte Ltd  5 SLR 541 at –.
20 Biofuel Industries Pte Ltd v. V8 Environmental Pte Ltd and another appeal  2 SLR 199;  SGCA 28 at .
21 Justice James Edelman, McGregor on Damages (20th edn, Sweet & Maxwell 2018) at Paragraph 10-001.
22 Robertson Quay (see footnote 2) at .
24 McGregor on Damages (see footnote 21) at Paragraph 10-002.
25 Biggin & Co Ld v. Permanite, Ltd  1 KB 422 at 438.
26 Robertson Quay (see footnote 2) at .
27 Ramesh s/o Krishnan v. AXA Life Insurance Singapore Pte Ltd  SGHC 197 at .
28 MFM Restaurants (see footnote 3) at .
29 Robertson Quay (see footnote 2) at .
30 MFM Restaurants (see footnote 3) at  and .
31 Sea-Shore Transportation Pte Ltd v. Tecknik-Soil (Asia) Pte Ltd  SGHC 231.
32 Armory v. Delamirie (1722) 1 Stra 505, 93 ER 664.
33 Sea-Shore Transportation Pte Ltd v. Tecknik-Soil (Asia) Pte Ltd  SGHC 231 at .
34 Biofuel Industries (see footnote 20) at –.
35 Tay Joo Sing v. Ku Yu Sang  1 SLR(R) 765 at –.
36 Golden Strait Corpn v. Nippon Yusen Kubishika Kaisha  2 AC 353 (HL).
37 Justlogin Pte Ltd and another v. Oversea-Chinese Banking Corp Ltd and another  1 SLR(R) 425;  SGHC 209 at .
38  1 SLR 573;  SGHC 231.
39 id. at .
40 id. at .
41  UKSC 43.
42 id. at .
43 Poh Fu Tek and others v. Lee Shung Guan and others  4 SLR 425;  SGHC 212 at .
44 Columbia Asia Healthcare Sdn Bhd v. Hong Hin Kit Edward and another and another appeal  2 SLR 395 at . (Note: this was in the context of a share valuation dispute.)
45 Columbia Asia Healthcare Sdn Bhd v. Hong Hin Kit Edward and anor  3 SLR 87.
46 Columbia Asia Healthcare Sdn Bhd v. Hong Hin Kit Edward and anor  2 SLR 395 at .
47 D Frykman and J Tolleryd, Corporate Valuation – an easy guide to measuring value, p. 88.
48 Poh Fu Tek (see footnote 44) at ; see also the Australian case of Pownall v. Conlan Management Pty Ltd (1995) 16 ACSR 227, where evidence pertaining to financial projection and valuation of shares was deemed inadmissible because the assumptions underlying the DCF valuation were not proved.
50 Christopher Moran Holdings Ltd v. Bairstow and another  2 AC 172 at 184E. Though this is in the context of a disclaimer of a lease by a liquidator, the court held that assessing compensation payable pursuant to a statutory right of compensation arising from the disclaimer is 'precisely the same exercise as has to be undertaken when assessing the damages for a breach of contract': see 180D.
51 Swiss Butchery (see footnote 15) at .
52 D Frykman and J Tolleryd (see footnote 48) pp. 72–78; see also Christopher Glover, The Valuation of Unquoted Companies (4th Edn, Thomson Gee 2004), pp. 240–244.
53 Poh Fu Tek (see footnote 44) at .
55 id. at –.
56 Miliangos v. George Frank Ltd  1 AC 443.
57 Indo Commercial Society (Pte) Ltd v. Ebrahim and another  2 SLR(R) 667;  SGHC 230.
58 id. at .
59 Grains and Industrial Products Trading Pte Ltd v. Bank of India and another  3 SLR 1308;  SGCA 32 at .
61 id. at .
62 Robertson Quay (see footnote 2) at –.
63  SGHC(I) 07.
64 id. at .
65 The Oriental Insurance Co Ltd v. Reliance National Asia Re Pte Ltd  2 SLR(R) 385 at –.
66 id. at –.
67 id. at .
68  AC 185 (HL).
69 id. at 203.
70 Teo Sing Keng and another v. Sim Ban Kiat  1 SLR(R) 340.
71 id. at 645.
72 Thio Syn Kym Wendy v Thio Syn Pyn  SGHC 54 at –.
73 id. at .
74 Poh Fu Tek (see footnote 44) at .
75 Vita Health Laboratories Pte Ltd and others v. Pang Seng Meng  4 SLR(R) 162;  SGHC 158 at .
76 Order 25 Rule 3(1)(d) and Order 40A Rule 1.
77 Order 25 Rule 3(1)(f).
78 Order 25 Rule 3(1)(h).
79 Swiss Butchery (see footnote 15) at .
80 id. at .
81 Sea-Shore Transportation Pte Ltd v. Tecknik-Soil (Asia) Pte Ltd  SGHC 231 at .
82 Columbia Asia Healthcare Sdn Bhd v. Hong Hin Kit Edward and anor  2 SLR 395 at .
83  2 Lloyds rep 68.
84 Order 40A Rule 2(2).
85 Field v. Leeds CC (2000) 32 H.L.R. 618, at 624.
87 Vita Health (see footnote 74) at –.
88 Ku Jia Shiuen (an infant suing through her mother and next friend, Tay Pei Hoon) & Anor v. Government of Malaysia & Ors  4 MLJ 108 at .
89 Resource Piling Pte Ltd v. Geospecs Pte Ltd  1 SLR 485 at  citing Pacific Recreation Pte Ltd v. SY Technology Inc  2 SLR (R) at –.
90 Pacific Recreation Pte Ltd v. SY Technology Inc and another appeal  2 SLR(R) 491;  SGCA 1 at .
91 Id. at .
92 HSBC Institutional Trust Services (Singapore) Ltd v. Toshin Development Singapore Pte Ltd  4 SLR 738 at .
93 Judicial Commissioner Foo Chee Hock, Singapore Civil Procedure Volume 2018 Volume 1 (Sweet & Maxwell 2018) at 40A/2/1.
94 id. at 40A/1/2.
95 Leong Wing Kong v. Public Prosecutor  1 SLR(R) 681 at .
96 Singapore Civil Procedure 2018 (see footnote 92) at 40A/1/2.
97 Kong Nan Siew v. Lim Siew Hong  1 MLJ 262.
98 Order 40A Rule 3(2)(a).
99 Pacific Recreation (see footnote 89) at .
100 Order 40A Rule 3(1).
101 id., at Rule 3(2)(a).
102 id., at Rule 3(2)(b).
103 id., at Rule 3(2)(c).
104 id., at Rule 3(2)(e).
105 id., at Rule 3(2)(f).
106 Alwie Handoyo v. Tjong Very Sumito & Anor and another appeal  4 SLR 308 at .
107 Pacific Recreation (see footnote 89) at .
108  2 SLR 655.
109 See PH Hydraulics & Engineering Pte Ltd v. Airtrust (Hong Kong) Ltd and another appeal  2 SLR 129 at ; see also MFM Restaurants (see footnote 3) at .
110 Wrotham Park Estate Co Ltd v. Parkside Homes Ltd and others  1 WLR 798 at 815.
111 Turf Club (see footnote 12) at .
112 id., at (see footnote 12) at .
113 id., at .
114 id., at .
115 One Step (Support) Ltd v. Morris-Garner and another  2 WLR 1353 at –.
116 Turf Club (see footnote 12) at .
117 Civil Justice Commission Report, 29 December 2017, foreword by the Honourable Judge of Appeal Tay Yong Kwang at .
118 Report of the Civil Justice Review Committee at .
119 id. at .